The Phillips curve is an old idea made newly urgent thanks to our long recovery from the Great Recession. In his 1958 study of the UK economy between 1861 and 1913, Alban William Phillips of the London School of Economics discovered that wages and unemployment move in opposite directions over time. The subsequent literature applied this idea to prices of goods and services. In the modern literature, the relationship between inflation and some measure of unused resources is often called the price Phillips curve or simply the Phillips curve; when wage growth is considered instead of inflation, it is called the wage Phillips curve.

This article also appeared in the Third Quarter 2019 edition of Economic Insights. Download and read the full issue.